State orders health club to refund member fees Attorney general faults Bay Fitness in Annapolis

September 12, 1997|By Tanya Jones | Tanya Jones,SUN STAFF

The owner of an Annapolis health club must refund the advance payments collected from members and stop collecting the payments from other customers under a ruling announced yesterday by Attorney General J. Joseph Curran Jr.

The ruling, issued by the Consumer Protection Division of Curran's office, also requires Gary D. Mackler, owner of Bay Fitness in the 100 block of Defense Highway, to pay a $47,000 fine plus the cost of the investigation.

Mackler had not posted a bond with the Consumer Protection Division to cover the amount Bay Fitness had collected in advance payments, as required by Maryland's health club law, said Steven Sakamoto-Wengel, an assistant attorney general.

The club should have posted a bond, letter of credit or cash deposit large enough to cover a full refund to customers if the business were to close, he said.

"When customers are asked to pay months or even years in advance, they should at least be given the peace of mind that if the club closes, they'll get their money back," Curran said in a news release.

"In this case, we simply had to step in and stop the company from collecting any more large advance payments."

Health clubs, weight-loss centers and self-defense schools that collect more than three months' advance payments or more than $200 in initiation fees must post a bond, Sakamoto-Wengel explained.

Records show Bay Fitness collected as much as 12 months' payment in advance, he said.

But Mackler said his club, open since 1992, stayed within the law. Under the most expensive plan, customers paid a $150 registration fee and $130 for the first and last month of membership, he said.

"We're not trying to hurt anybody," Mackler said. "I can't imagine why the attorney general is trying so hard to defame us."

His company, Chesapeake Fitness, which underwrites Bay Fitness, has filed for protection from its creditors under federal bankruptcy laws, and he couldn't afford to pay the refunds anyway, Mackler said.

About 1,500 people work out at the Annapolis club, he said.

Mackler said he plans to contest the order.

The Consumer Protection Division also has filed administrative charges against Mackler in connection with two other Bay Fitness clubs he once owned.

Bay Fitness in Chester on Kent Island had no bond to cover refunds to customers but should have, according to the attorney general's office.

Mackler said he turned over the club to the landlord in May. Officials don't know how much Mackler may owe members of that club, according to Sakamoto-Wengel.

Mackler also gave up Bay Fitness in Severna Park in May. That club had a $50,000 bond but should have been bonded for more than $100,000 to cover refunds, according to the attorney general's office.

An administrative law judge is to hear arguments in those cases in October and make a recommendation to the chief of the Consumer Protection Division. Mackler could be ordered to pay refunds and penalties similar to those in the case of the Annapolis center.

Mackler said he wanted to honor the memberships from both of the defunct clubs at his Annapolis facility, near Annapolis Mall, but the attorney general blocked him from doing so.